Tag: Pennsylvania

Unsubstantiated Claims of Poor UM/UIM Claims Handling Not Sufficient Bad Faith Pleading, Federal Judge Rules

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PITTSBURGH, Dec. 21 — An insured failed to sufficiently plead bad faith in the handling of his underinsured motorist coverage claim by State Farm Insurance Company,  a federal judge ruled Dec. 21 in granting the insurer’s motion to dismiss without prejudice.

Robert R. Mondron was injured as a passenger in an auto accident, which allegedly caused injuries including head neck and facial injuries and internal injuries.  The driver of the vehicle tendered his full liability limits of $110,000 under his own policy, and Mondron sought UIM benefits from his insurer, State Farm.

According to Mondron, State Farm  “failed to make a reasonable offer of settlement,” sued the insurer in the Allegheny County, Pa., Court of Common Pleas, alleging breach of contract, bad faith,  and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).

State Farm moved to dismiss the bad faith claims after removing the case to the  Western District of Pennsylvania.  In granting the motion, U.S. District Judge Cathy Bissoon held that dismissal of the bad faith claim is proper:

 “The gravamen of Plaintiff’s bad faith claim is that the Defendant unreasonably denied UIM [underinsured motorist] benefits to which Plaintiff is entitled under the terms of his parents’ insurance policy.  As noted, he alleges that Defendant ‘unreasonably delayed’ the handling of his claim, ‘inadequately investigated’ the claim, ‘failed to make a reasonable offer of settlement’ and ‘knew of or recklessly disregarded its lack of reasonable basis in evaluating Plaintiff’s underinsured motorist claim.’  These types of conclusory allegations are insufficient to state a plausible basis for relief.”

Judge Bissoon also found that Mondron’s Pennsylvania Unfair Insurance Practices Act (UIPA) claims should also be dismissed, holding “these allegations are nothing more than redundant and conclusory re-assertions of Plaintiff’s prior bad faith  allegations…Plaintiff’s generic invocation of statutory language is insufficient to satisfy his federal pleading burden.” Judge Bissoon stated. She similarly dismissed UTPCPL claims, all without prejudice.

Robert R. Mondron v. State Farm Mutual Automobile Insurance Co., No. 16-412, W.D. Pa.; 2016 U.S. Dist. LEXIS 17604

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Third Circuit Affirms Summary Judgment For Nationwide in Bad Faith Case

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PHILADELPHIA, October 4 – Dickie McCamey lawyers C.J. Haddick and Bryon Kaster have won affirmance of a summary judgment in favor of Nationwide Insurance in a bad faith case before the U.S. Court of Appeals For The Third Circuit.

In Bodnar, et al. v. Nationwide Mutual Insurance Company, the Plaintiffs alleged that Nationwide was guilty of bad faith in the investigation of whether or not the work-related death of an employee of its insured was covered or barred by the terms of the  insured’s CGL policy, which included an  Employers’ Liability Exclusion.  During the investigation of the claim, Nationwide  filed a declaratory judgment action because of conflicting information on the employment status of the deceased employee.  Nationwide later dismissed the declaratory judgment action and settled with the estate of the deceased employee’s estate, ultimately agreeing to indemnify its insured.

The decedent’s estate took an assignment of rights from the insured as part of the settlement , and filed a bad faith action against Nationwide in the U.S. District Court for the Middle District of Pennsylvania. Nationwide requested and obtained summary judgment in its favor in the district court, U.S. District Judge Robert Mariani finding:

“The claims file reflects information that indicates that Berry [decedent] variously could have been an employee, a temporary worker, or independent contractor…Plaintiffs may not like how the claim was handled, but it cannot be said that Nationwide breached any duty under these facts.”

In affirming summary judgment, U.S. Third Circuit Judge Thomas Hardiman agreed, finding that Nationwide’s filing of a declaratory judgment,  and subsequent decision to indemnify its insured in the underlying wrongful death action,  reflected both an ongoing investigation and open minds on the part of Nationwide’s claims personnel:

“Given the ambiguities surryounding Berry’s employment status, it was reasonable for Nationwide to seek declaratory relief. . . Appellants failed to show by clear and convincing evidence that Nationwide acted unreasonably in the manner [in which] it handled Bodnar’s claim.”

Bodnar, et. al. v. Nationwide Mutual Insurance Company, No. 15-3485 (3d Cir., October 4, 2016)

Dickie McCamey Lawyers Hold Summary Judgment For Harleysville On Appeal Of Breach of Contract and Bad Faith Case

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HARRISBURG, September 13 – Dickie McCamey Attorneys C.J. Haddick and Christine Line won a victory for Harleysville Insurance in Pa. Superior Court yesterday, winning an affirmance of a summary judgment motion in a coverage and bad faith case originally filed against the company in Berks County.

In the case, insured Clyde Rogers made claims under both commercial and inland marine insurance policies issued by Harleysville covering a van Rogers used in his business.  After Rogers claimed the vehicle caught fire on January 25, 2012, and was a total loss, he sought reimbursement for the van, tools, and equipment allegedly destroyed inside the van.  Harleysville  paid Rogers a policy limit of $5,000.00 for unscheduled tools and equipment which Rogers accepted, and offered to pay $1,120.00 for the value of the van and $1,220.68 for rental of a substitute van, which Rogers did not accept.  Rogers thereafter filed suit against Harleysville in the Berks County Court of Common Pleas.

The Berks County Court of Common Pleas granted Harleysville’s Motion for Summary Judgment, finding that Harleysville’s remaining offers to pay for the actual cash value of the van, and for rental of a substitute van, were the only remaining obligations owed under either the commercial auto or inland marine policies.  Rogers appealed.

On appeal, a unanimous panel dismissed all of the arguments made on Rogers’ behalf seeking reversal of the judgment in favor of the insurer.  Pa. Superior Court Senior Judge William H. Platt found that nothing in either of the Harleysville polices was ambiguous, as Rogers contended.  Judge Platt also found there was no provision in the policies supporting Rogers’ claims for storage fees or loss of business income.

Based upon his review of the policy language and Harleysville’s position on payment of the claim, the Court found the Plaintiff’s bad faith claims without merit, and affirmed summary judgment on those claims as well.

Finally, Judge Platt ruled that the failure of Mr. Rogers’ lawyer to attend oral argument on Harleysville’s summary judgment motion despite receiving notice of the date of the argument from Harleysville’s lawyers was insufficient grounds to overturn the judgment in favor of Harleysville.

Clyde Rogers v. Harleysville Insurance, No. 289 MDA 2016, Filed September 13, 2016, Pa. Superior Court.

 

Iqbal Used To Dismiss Bad Faith Claims Against Foremost

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SCRANTON, Aug. 5 — A federal magistrate judge has granted Foremost Insurance’s motion to dismiss a bad faith claim on the grounds it did not meet minimum fact pleading requirements under federal law.  The judge found that the Plaintiff’s reliance solely on the allegation of a breach of contract count and the bare language of the Pa. Bad Faith Statute were not enough to allow the claim to survive.

Plaintiff Beata Rogowski bought a policy of  homeowners insurance from Foremost Insurance Co. and filed a claim for fire damage sustained in her home.  After disagreements arose during the claim, Rogowski sued Foremost in U.S. District Court for the Middle District of Pennsylvania, claiming that Foremost did not properly handle adjustment of the claim.  She alleged both a breach of contract count and a bad faith count.

Foremost filed a motion to dismiss both claims, but Magistrate Judge Martin C. Carlson granted the motion only as to the bad faith count, finding it not to have been properly plead.

Judge Carlson wrote:

“In reaching this conclusion, we note that [the bad faith] count of the plaintiff’s complaint consists of little more than a paraphrase of the statute, coupled with a factual assertion that the defendant has breached the insurance policy in ways which are undefined, but allegedly willful and malicious. Upon consideration, we conclude that these ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice’ to state a claim under [42 Pa. Consolidated Statutes Annotated] §8371. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). In this bad faith context, we require more than conclusory, bare-bones allegations that an insurance company acted in bad faith to sustain such a claim. Since Rogowski has not met these pleading requirements in her current, spare complaint the bad faith claim set forth in Count II of the complaint should be dismissed. However, mindful of the fact that plaintiffs often should be afforded an opportunity to further amend and articulate their bad faith claims, it is recommended that this count of the complaint be dismissed without prejudice to the filing of an amended complaint which meets the pleading standards prescribed by law for such claims.”

Judge Carlson also found the complaint not sufficiently specific to allow him at that point to dismiss the breach of contract count on grounds it was time-barred:

“Given the legal and factual ambiguity of the plaintiff’s complaint, an ambiguity which prevent[s] us from determining whether there are any barriers to the application of the contractual terms which call for the filing of a lawsuit within one year of the alleged loss, we believe that the plaintiff should be required to provide a more definite statement of this claim before the Court is tasked with assessing the legal merits of this motion to dismiss. Therefore, it is recommended that the plaintiff be directed pursuant to [Federal Rule of Civil Procedure] Rule 12(e) to submit a more definite statement of this claim. Upon receipt of this more definite statement the Court could then determine whether that claim is time-barred.”

Beata Rogowski v. Foremost Insurance Co., No. 15-1606, M.D. Pa.; 2016 U.S. Dist. LEXIS 95930 (Carlson, Dist. Mag. Judge)

Unfair Trade Claims Not Covered By Liability Insurance, Pa. Appeals Court Rules

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PITTSBURGH, Feb. 25 – The Pennsylvania Superior Court has ruled that Westfield Insurance is not obligated to defend or indemnify an insured from civil claims of unfair trade practices.

Westfield’s insured, PeopleKeys,  sued a former employee for misappropriation of trade secrets in federal court in Ohio, and the employee filed a counterclaim against PeopleKeys, alleging unfair business competition.  The counterclaim alleged that PeopleKeys’ suit was baseless, and done for the purposes of unfair competition with the former employee.  The counterclaim against PeopleKeys alleged PeopleKeys’ knew of the falsity of the allegations contained in the Ohio trade secrets litigation.  PeopleKeys submitted the counterclaim for defense and indemnity to its insurer, Westfield.

After Westfield denied coverage under the policy’s  Personal Advertising Injury Coverage Endorsement, PeopleKeys filed a breach of contract and bad faith suit against Westfield in Pennsylvania state court.  Westfield filed a motion for judgment on the pleadings, on grounds that the policy’s Personal Advertising Injury Endorsement did not apply to the Ohio counterclaim, and even if it did, the endorsement contained exclusions for 1.)  claims alleging knowing violation of the rights of another, or 2.)  claims for publication of material the insured knew to be false.  The trial court granted the motion and dismissed the claims against Westfield.

The Pa. Superior Court affirmed the trial court’s grant of Westfield’s motion for judgment on the pleadings, holding that Westfield had no duty to defend nor indemnify PeopleKeys in the Ohio litigation because the intentional conduct and knowing falsity exclusions to the Personal Advertising Injury Endorsement applied.  The Court, analyzing the counterclaim against Westfield under Ohio law, found that the allegations against Westfield plainly referred to intentional misconduct on the part of PeopleKeys, thereby barring coverage.

PeopleKeys, Inc. v. Westfield Insurance Company (Pa. Super., Feb. 25, 2016)

Breach of Contract, Bad Faith Cases Dismissed In Pittsburgh

PITTSBURGH, Feb. 5 – Chief District Magistrate Judge Maureen Kelly has dismissed breach of contract and bad faith claims against State Farm by an insured contractor, finding that the underlying allegations of damage caused by the contractor fell outside of policy period.

Reginella Construction was insured under a contractor’s liability policy with State Farm between July 2004 and May 2006.  In 2013, a homeowner filed suit against Reginella complaining of problems with the floor, caused by poor materials and workmanship.  The homeowner subsequently won the underlying case against Reginella.  State Farm denied defense and indemnity to Reginella in February 2014, claiming that the occurrence per the suit against Reginella fell outside of the policy period(s).

After Reginella sued State Farm in Allegheny County, Pa. in 2015, State Farm removed the case to federal court and filed a motion to dismiss pursuant to F.R.C.P. 12(b)(6).

“Although the cause of the damages to the Eck home was arguably within the coverage period, ‘the cause of injury . . . has no special relevance to determining the date an insurance policy is triggered, unless specifically required by the language of the applicable policy of insurance.’ Where, as here, there is no policy language requiring the cause of injury to be identified, Pennsylvania courts apply the ‘first manifestation rule’ to occurrence policies; that is, the court looks to when injury is ‘reasonably apparent,’ i.e., when it is first manifested.”

Judge Kelly granted State Farm’s motion to dismiss, based on the first manifestation rule and the allegations of the underlying complaint against Reginella, the damage caused by Reginella’s conduct fell outside of the applicable policy period.

Because the Court found that State Farm’s coverage position was supported by a “plain reading” of the policy provisions, it dismissed bad faith claims against State Farm as well.

Reginella Construction Co., Inc. v. State Farm Fire and Casualty Co., (W.D. Pa. Feb 5. 2016)(Kelly, C.M.J.)

Dickie McCamey Lawyers Obtain Rescission of $25M Product Contamination Policy For Client In Coverage Dispute

PITTSBURGH, Feb. 1 – Dickie McCamey lawyers Robert Marino and Dave Ziegler along with lawyers from Choate, Hall & Steward have successfully obtained rescission of a $25 million dollar surplus Product Contamination Insurance (PCI) policy issued by Starr Surplus Lines Inc. Co . to H.J. Heinz.  The ruling  relieves the insurer of reimbursing Heinz for expenses arising out of the furnishing of lead-contaminated baby food.

Applying New York law, U.S. District Judge Arthur Schwab ruled earlier this week that the omission of multiple significant prior contamination claims from Heinz’ loss histories in the application for coverage was material, thereby entitling Starr to rescission of the policies.  Schwab found testimony from Starr’s underwriters and executives that the unreported losses were material to insuring Heinz’ risk credible.

The Court, with the consent of counsel, empaneled an advisory jury to assist with fact finding, and while it agreed with most of the jury’s findings,  it departed and disagreed with that portion of the advisory jury verdict which found that Heinz had adequately proved Starr had waived the right to assert Heinz’ material misrepresentations as to prior losses.  Schwab wrote:

While Starr was not “perfect” in its assessment and underwriting practices, perfection is not the standard.  Instead, this Court finds that Starr acted more than reasonably under the circumstances.  Specifically, the Court finds that Starr’s expert was credible, and that Starr’s underwriters lacked sufficient knowledge of Heinz’ misrepresentations or omissions.

The Court rejected Heinz’ claims that Starr engaged in post-claim underwriting, and that Starr should have conducted further investigation during the underwriting process about prior losses, including delving into information about Heinz’ prior losses from sources other than the application, including applications for other coverages, and prior news coverage of Heinz contamination claims.

While Schwab conceded the equitable remedy of rescission ab initio was an extreme one, he ruled that Starr met its burden of proving entitlement to the equitable remedy.  Dickie McCamey’s attorneys worked as co-counsel in the case with Attorneys Bob Frank, John Nadas, Matt Arnould and others at Choate Hall & Stewart in the representation of Starr.

H.J. Heinz Company v. Starr Surplus Lines Ins. Co., (W.D. Pa., Feb. 1, 2016)(Schwab, J.).

Editor’s Note:  Judge Schwab’s opinion makes it fairly clear that an insurer does not have a reasonable duty to either 1.) presume an applicant is omitting information; or 2. ) investigate items which do not appear on the application.

-UPDATE- Reconsideration Denied; Summary Judgment for Harleysville Upheld In Bad Faith Case

READING, Feb. 2 – The Berks County Court of Common Pleas has denied Plaintiff’s Motion for Reconsideration on the same day the motion was filed regarding the case discussed in this prior post.

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Reading, Pa., Jan. 19. Dickie, McCamey & Chilcote attorneys C.J. Haddick and Christine Line have won a dismissal in a bad faith case in favor of client Harleysville Insurance Companies.  The Berks County, Pa.  Court of Common Pleas on January 19 granted the motion for summary judgment filed by Haddick and Line in a bad faith suit arising out of a commercial property coverage dispute over an alleged van theft and fire involving business personal property.  Haddick and Line are members of the firm’s Insurance Law and Litigation Group.

Harleysville did not dispute it owed coverage for the value of the van, substitute van rental expense, and for the value of certain business personal property under an inland marine policy.  It did contest, however, the Plaintiff’s claimed entitlement to a variety of other sums for towing, vehicle storage, loss of business income, and claims for tool losses in excess of the policy limit.  The Court agreed that the additional claims were unsupported by the policy language.

The Court also agreed with Harleysville’s position that regardless of the outcome of the several coverage claims, the claims decisions made were made with reasonable legal and factual bases.  As a result, the Plaintiff’s bad faith claims were dismissed as well.

For additional details on  the ruling, or suggestions  how to have your coverage and bad faith claims decided faster and more favorably with greater cost control, contact us at chaddick@dmclaw.com or 717-731-4800

Rogers Flooring Co. v. Harleysville Ins. Co., Berks County No. 14-674 (Sprecher, J.)

Zurich Asks 3rd Circuit To Reverse $1M UM/UIM Award

PHILADELPHIA, Jan. 13.  Zurich American Insurance company has asked the U.S. Court of appeals  for the Third Circuit to reverse a lower court’s ruling ordering it to pay $1 million in uninsured motorist (UM) benefits, arguing that a sign down form setting UM limits at $35,oo0.00 was valid and enforceable.

Stefan Freeth alleged injury while working on a truck owned by roadway contractor Road-Con Inc.  He sought UM/UIM benefits under Road – Con’s commercial auto policy with Zurich, and was awarded $1 million in U.S. District Court for the Eastern District of Pa., following Zurich’s removal of the case from the Chester County, Pa. Court of Common Pleas.

On appeal, Zurich contends that the sign down form completed by a company executive was a sufficient “express designation” within the meaning of the Pa. M.V.F.R.L.  to constitute a valid election of UM/UIM limits lower than the commercial auto policy’s bodily injury limits of $1 million dollars.  Freeth’s counsel claims the form is ambiguous, stating,  “there is no affirmative written election of the amount of $35,000.00 by Road-Con. There is no handwritten entry by the named insured or check mark or initialing of the amount of $35,000.00 on the Summary Form.”

Stefan Freeth v. Zurich American Insurance Co., No. 15-2924, (3rd Cir 2015)

Editor’s Note:  For copies of the briefing, email me at chaddick@dmclaw.com

Federal Judge Denies Stay, Upholds Insurer’s Work Product Privilege In Bad Faith Case

Reading, Pa., Jan. 19.  U.S. District Judge  Joseph Leeson  has denied a motion filed by Allstate Insurance Company to sever and  stay a  bad faith claim, including  discovery,  in a combined breach of contract and bad faith case, but has ordered that Allstate may properly assert work product privilege protection as to matters genuinely prepared in anticipation of litigation.

In Wagner v. Allstate, Judge Leeson conceded that while there may be a basis for separate trial of the breach of contract and bad faith claims under F.R.C.P. 42 , there was no need to prevent simultaneous discovery in both the breach of contract and bad faith claims.

Judge Leeson also granted in part and denied in part Plaintiff’s motion to compel discovery of Allstate’s claims file, ruling that the Court needed more information to make a complete ruling on the motion.  The Court ruled that Allstate did have the right to assert privilege over materials in its claims files which were prepared in anticipation of litigation, while observing the parties disputed the date at which time Allstate’s anticipation of litigation over the underlying UIM claim was bona fide.

Wagner v. Allstate Ins. Co., E.D. Pa. 2016 (Leeson, J.)

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